Saturday, January 24, 2009

oil price gamble :(

In a five year period, hedge funds, and the big Wall Street banks had placed in the commodities future markets went from $13 billion to $300 billion.

the price of the oil went up from ~60 to 147$ in less than a 1 year.. supply and demand alone cannot caused that.

Between Q4'07 until Q2'08 the world wide supply of oil went up while the demand went down, and this is the time where there was the fastest surge of oil price increase...the only thing that lifted the price went up was the investor demand, alias gamblers of the price of the oil.

Demand created was created on Wall Street by hedge funds and the big Wall Street investment banks like Morgan Stanley, Goldman Sachs, Barclays, and J.P. Morgan, who made billions investing hundreds of billions of dollars of their clients’ money.

Who would have known that Morgan Stanley is "the largest oil company in the world"?it doesn't own or control oil wells or refineries, or gas stations,but is a significant player in the wholesale market through various entities controlled by the corporation.

It's impossible to tell exactly who was buying and selling all those oil contracts because most of the trading is now conducted in secret...

Enron managed to convince the US gov to deregulate the commodity market, so the can control the direction of energy future market, they we're able to drive the price of electricity up, some say, by as much as 300 percent on the West Coast... when Enron went bust, their trader became the most valuable employee on Wall Street

It finally popped with the bankruptcy of Lehman Brothers and the near collapse of AIG, who were both heavily invested in the oil markets. With hedge funds and investment houses facing margin calls, the speculators headed for the exits.

From July 15th until the end of November, roughly $70 billion came out of commodities futures from these index funds, while, gasoline demand went down by roughly 5% over that same period of time. Yet the price of crude oil dropped more than $100 a barrel. It dropped 75%...

what the hell the Commodity Futures Trading Commission was doing during this whole time?!?